George Loewenstein and Peter A. Ubel, “Hedonic Adaptation and the Role of Decision and Experience Utility in Public Policy.” Journal of Public Economics 92(8–9): 1795-1810, 2008 [pdf].
• Choice-based measures of welfare are inappropriate because they assume what they need to demonstrate, that choice reflects (at least individual) welfare. Further, people mispredict what will make them happy, and are subject to all sorts of biases and preference reversals and framing effects and so on.
• Experience-based measures of welfare are problematic, too, in part because people happily and repeatedly make decisions that they know will not increase their experience utility. Experience utility ignores non-hedonic dimensions of welfare such as a meaningful life or the acquisition and deployment of capabilities.
• People who adapt (hedonically) to a disease or condition nevertheless would be willing to pay a considerable amount to be free of the disease. Can it really be the case that, given adaptation, more instances of paraplegia are welfare-neutral?
• Contra Bentham, not all pleasurable activities are equally valuable. Notice that wine experts tend to take less pleasure from average wines, but would not voluntarily renounce their expertise. They can appreciate nuance, and want to be able to.
• Meaning in life could take different forms, including extending yourself, asserting free will, or having the capacity to feel anguish. Good life stories generally involve obstacles. Some altruistic activities lower happiness. People are willing to trade longevity for a good death.
• For public decision making, we need to employ a hybrid of decision utility and experience utility. Keeping people informed about matters such as hedonic adaptation can help direct those decisions in desirable directions.
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